Handout 3 Flashcards
The 4 options of the need for location planning
- Expand an existing facility
- Add new locations while retaining existing one
- Shut down at one location and move to another
- Do nothng
Globalization has to contend with political instability and political unrest, which can
create risks for personnel safety and the safety of assets. Moreover, a government has the power
to nationalize facilities, which means to take over the company-owned facilities of a global
business.
Political
Globalization has to contend with ________, which remains a threat in many parts of
the world. It will put risk on personnel and assets of a global business
Terrorism
Globalization has to contend with economic instability, which might create inflation or
deflation that may negatively impact the profitability of a global business.
Economic
Globalization has to contend with changing laws and regulations that may reduce or
eliminate the key benefits of having a global business.
Legal
Globalization has to contend with corruption and bribery, which are common in some
countries. This poses a number of issues, which include maintaining operations without resorting
to bribery and preventing employees from engaging in bribery act.
Ethical
Globalization has to contend with the cultural differences present in different countries.
An example of this is when Walmart first opened its stores in Japan using its low-cost pricing
strategy. Walmart struggled since the Japanese consumers associated low cost with low quality
as their cultural perception.
Cultural
Thisis the economic comparison of location alternatives.
This method determines the total cost which will be incurred in a location decision based on
attributed fixed and variable costs, given the capacity volume of the sites.
Locational Cost-Profit-Volume Analysis
This involves the movement of either raw materials or finished goods.
Transport Model
The value of factor rating provides a rational basis for evaluation of location alternatives. It also facilitates comparison among alternatives by establishing a composite value
for each alternative that summarizes all related quantitative and qualitative factors.
Factor Rating
